As of January 1, 2026, a new Colorado law is officially in effect, and it’s already impacting furnace and water heater prices.

Under House Bill 23-1161 (Section 9), all new gas furnaces and water heaters sold or installed in the state must now meet Ultra Low NOx emissions standards or carry ENERGY STAR certification.

This is part of Colorado’s effort to reduce air pollution and improve air quality – specifically by cutting nitrogen oxides (NOx), which are major contributors to smog.

What Changed?

·      Standard 80% gas furnaces are no longer available. Any remaining older models were sold through the end of 2025. Only newer, cleaner models can be installed from now on.

·      New systems cost more. Expect to pay $1,000–$2,000+ more for furnace or water heater replacements. The higher cost comes from improved emissions technology and better energy efficiency.

·      You don’t need to replace anything right now. If your current furnace or water heater is working, you’re not required to replace it. But when the time comes, you’ll have fewer (and more expensive) options.

What This Means for You

·      If your furnace or water heater is 15–25 years old, start budgeting for a higher replacement cost.

·      If you’re building a home, renovating, or planning an upgrade, make sure your contractor is installing Ultra Low NOx or ENERGY STAR compliant equipment.

·      If your system was recently replaced (2025 or later), good news – it’s likely already compliant.